Currently 28, maxing out my Roth IRA for 4 years now. Any extra money I have has been put into a Vanguard Taxable account of the US Total Market (85%) and International market (15%). I currently have 50k put into the taxable account.

My question is, is there a point to this? Im looking to start withdrawing in the next 10 years (start with dividends, then go to selling).

I already have a mortgage with roommates that pay me, no student debt, just come across some extra money that I want to invest.

Sure there is; it's a very good means to grow wealth assuming a long term investment outlook which you have based on your 10 year withdrawal plan. For whatever reason that would be. If you plan to live off of it in 10 years you're gonna need a lot more. You're a lot further ahead at 28 than most. Keep doing what you're doing, keep your emergency fund out of equities and slowly build it. The question often is; where else would be a good place to invest money? Having a mortgage is not required but paying it down is a good place to save money now that you have one.

Currently 28, maxing out my Roth IRA for 4 years now. Any extra money I have has been put into a Vanguard Taxable account of the US Total Market (85%) and International market (15%). I currently have 50k put into the taxable account.

My question is, is there a point to this? Im looking to start withdrawing in the next 10 years (start with dividends, then go to selling).

I already have a mortgage with roommates that pay me, no student debt, just come across some extra money that I want to invest.

Strange question frankly. Also a Roth IRA alone isn't going to fund a retirement so I'd think long and hard about your plans to withdraw this at age 38.

Sure there is; it's a very good means to grow wealth assuming a long term investment outlook which you have based on your 10 year withdrawal plan. For whatever reason that would be. If you plan to live off of it in 10 years you're gonna need a lot more. You're a lot further ahead at 28 than most. Keep doing what you're doing, keep your emergency fund out of equities and slowly build it. The question often is; where else would be a good place to invest money? Having a mortgage is not required but paying it down is a good place to save money now that you have one.

Id like to get a second property soon, so I am saving for that on the side as well as putting $125 every week into the US and International funds. I am also paying down the mortgage by adding $200 extra a month.

You only get so much tax-deferred space. Once you fill it up, all extra savings go to a Taxable account.

That's it. There's no other alternatives. Even a checking account is taxable.

Now, you can put the money in tax-managed funds or municipal bonds inside that taxable account, and pay 0 or little taxes, but it's still a taxable account.

One really nice advantage for early retirement is that money you pull from a taxable account is not considered income. You may have to pay long-term capital gain taxes on the gains of the funds that you pull, but your taxable income will look a lot lower to the government.

For instance, if I have $200,000 in a taxable account when I retire, I could pull $20,000 a year from that for 10 years, $30,000 a year from my standard IRA, and the government will treat me like I only have $30,000 in income instead of $50,000 (qualifying me for the Affordable Care Act, etc.).

I'd pay some capital gain taxes on the money I withdrew from the taxable account, but only on the growth, not all of it (because the money I put in had already been taxed way back when I earned it)

Of course, your IRA is a ROTH IRA, so you could pull money from that tax-free, and it won't be considered income. So you shouldn't have any problems keeping your official "income" very low, and therefore your taxes very low or zero.

Strange question frankly. Also a Roth IRA alone isn't going to fund a retirement so I'd think long and hard about your plans to withdraw this at age 38.
[/quote] mototrojan

I respectfully disagree. If you start in your twenties and contribute the max to a roth ira and retire at full retirement age, your retirement will be fully funded if you are an average American. My roth ira will be all i need after 70 and alot of years i was only able to invest $2000.

Last edited by averagedude on Thu Dec 06, 2018 3:03 pm, edited 2 times in total.

Strange question frankly. Also a Roth IRA alone isn't going to fund a retirement so I'd think long and hard about your plans to withdraw this at age 38.

I respectfully disagree. If you start in your twenties and contribute the max to a roth ira and retire at full retirement age, your retirement will be fully funded if you are an average American. My roth ira will be all i need after 70 and alot of years i was only able to invest $2000.

He wants to retire at 38, not full retirement age.

A SIMPLE IRA max contribution is $12,500.. I don't think there's a ROTH version of that, is there?

And then can also contribute $5,500 to a ROTH or standard IRA.

So the most he can save is $18,000 a year tax-deferred. Hard to retire on that by 38.

But he's also saving a ton in taxable as well.

Last edited by HomerJ on Thu Dec 06, 2018 3:06 pm, edited 1 time in total.

The point of having the taxable account is the hope that your 50k will grow in the next years. With your plans, you would plan on selling those stocks and (hopefully) paying long term capital gains tax on any gains from that 50k. If you find a way to do this in a year where your income is low, this can be very tax-efficient.

If you NEED that money for something at a set time (exactly 10 years from now), you might want it to be in cash/CD at least for a year or two before it is used.

If you view that money as growth that you eventually want to put into a second property without a strict timeline, then keeping your current investment in stocks and selling when the time is good might be another option.

My taxable account is not strictly for retirement. I may pull from it within 5-10 years - it's an account with funds I can actually pull from e.g. buy a home, car etc. So I'm buying (tax exempt) bonds there too since 100% equities is not suitable for a potentially short timeframe.

Where do you all keep money that you might need within the next few years?

My taxable account is not strictly for retirement. I may pull from it within 5-10 years - it's an account with funds I can actually pull from e.g. buy a home, car etc. So I'm buying (tax exempt) bonds there too since 100% equities is not suitable for a potentially short timeframe.

Where do you all keep money that you might need within the next few years?

Yes, use of a taxable account is required if you want to invest money and do not have access to a tax-advantaged account (or wish to invest more per year than those vehicles allow). There are plenty of people who can contribute none of their income to 401ks, 403bs, IRAs, etc. For them, a taxable account is their only option.

"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

Sure there is; it's a very good means to grow wealth assuming a long term investment outlook which you have based on your 10 year withdrawal plan. For whatever reason that would be. If you plan to live off of it in 10 years you're gonna need a lot more. You're a lot further ahead at 28 than most. Keep doing what you're doing, keep your emergency fund out of equities and slowly build it. The question often is; where else would be a good place to invest money? Having a mortgage is not required but paying it down is a good place to save money now that you have one.

Id like to get a second property soon, so I am saving for that on the side as well as putting $125 every week into the US and International funds. I am also paying down the mortgage by adding $200 extra a month.

Currently 28, maxing out my Roth IRA for 4 years now. Any extra money I have has been put into a Vanguard Taxable account of the US Total Market (85%) and International market (15%). I currently have 50k put into the taxable account.

My question is, is there a point to this? Im looking to start withdrawing in the next 10 years (start with dividends, then go to selling).

I already have a mortgage with roommates that pay me, no student debt, just come across some extra money that I want to invest.

While I was still working I was maxing allowed deferred compensation and maxing Roth contribution. Had medical insurance that basically covered everything paid by employer..... what's left besides taxable? Last 8 years my conservative portfolio produced 7.96% average annual return so paying off a 3.0% mortgage early did not seem like the most intelligent use of income.

My taxable account is not strictly for retirement. I may pull from it within 5-10 years - it's an account with funds I can actually pull from e.g. buy a home, car etc. So I'm buying (tax exempt) bonds there too since 100% equities is not suitable for a potentially short timeframe.

Where do you all keep money that you might need within the next few years?

My money that I might need in the next few years is in a CD ladder with Ally. Anything less than 5 years shouldn’t be in market. Some people even use the 10 year rule.

Sure there is; it's a very good means to grow wealth assuming a long term investment outlook which you have based on your 10 year withdrawal plan. For whatever reason that would be. If you plan to live off of it in 10 years you're gonna need a lot more. You're a lot further ahead at 28 than most. Keep doing what you're doing, keep your emergency fund out of equities and slowly build it. The question often is; where else would be a good place to invest money? Having a mortgage is not required but paying it down is a good place to save money now that you have one.

Id like to get a second property soon, so I am saving for that on the side as well as putting $125 every week into the US and International funds. I am also paying down the mortgage by adding $200 extra a month.